China exports inflation: "This dynamic seems as inevitable as gravity itself." Chinese demand for oil and steel has pushed prices up in those markets. Now it is affecting commodities like cotton and food products. That's being passed on to developed markets like the U.S., and it will really hit home in 2012. This is in the process of happening.

China demand shock: The country's long-term economic rebalancing results in an permanent increase in global demand. Supply is sticky, and it will take time for it to catch up, thus limiting the world's ability to cope with this rise in demand. This is starting to happen.

If this didn't sound alarming, their conclusion on how this resembles the reverse of China's entry into the WTO should.

From Societe Generale:

The ascension of China to the WTO in 2001 was perhaps the most profound development in economics in recent decades as it caused a massive boost to the global labour supply whilst constraining wages growth in the developed economies. In short, the economic ascension of China, as the peak of all that was considered benign in globalisation, flattened the global Phillips Curve to such an extent that the output-inflation trade-off for the developed economies had skewed to such an extent that much higher output could be tolerated without generating inflation.

The major consequence of China's policy response to the global financial crisis is that it is now engineering an outward shift in the global demand curve. Is there any reason to believe that the outward shift China engineers in the demand curve will be any less profound than the supply curve shift it engineered a decade ago?

If you need more evidence this is already happening, note how U.S. CPI is being led by China CPI now.